Glossary

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Abatement/abated  If you are re-employed by the Northern Ireland Civil Service (NICS) after you have drawn your pension, we may reduce or stop paying your pension. This is because your new salary and your pension, when added together, should not normally be more than your salary when you retired.

ACP  ACP stands for Annual Compensation Payment.

Active member  A member of an occupational pension scheme who is building up pension benefits from their present job.

Actuary  A professional adviser that all pension schemes must appoint by law. The actuary assists the managers/trustees of the schemes on financial issues related to the funding of the scheme and conducts regular actuarial valuations.

A-day 6 April 2006, the date when the tax changes happens.

Adjustment factor  If you decide to join premium, when we convert your service in the current scheme into premium service, we have to change your service to take account of the higher level of benefits in premium. If you have paid full contributions, 1 year in the current scheme is worth 0.92 of a year in premium. As a result, 0.92 is the adjustment factor.

Administrator  The person or body responsible for the day-to-day management of the pension scheme, including maintenance of members’ records, calculation and payment of benefits, and management of contributions.

Aggregation  If you leave the scheme and then come back, you can usually either keep the two periods of service separate or you can choose to join your two periods of service together – this is called aggregation.

Annual Allowance (AA) the annual limit on pension saving attracting tax relief. Set at £215,000 in tax year 2006-7.

Annuity  When you want to draw your pension under partnership, you will use your pension ‘pot’ to buy an annuity which will provide your income during retirement.

Authorised payments the only type of payments your scheme can make after A-day without being subject to extra tax.

AVCs  Additional Voluntary Contributions. This is a method you can use to top up your pension. You pay additional contributions to a pension provider – this should then build up to a fund. When you retire, you use your fund to buy an annuity – a pension for life – which is on top of your Principal Civil Service Pension Scheme (Northern Ireland) [PCSPS(NI)] pension. See Your choice... topping up your pension benefits. [Back to A to Z List]

Beneficiary  A beneficiary is the person or people who you decide should receive your lump sum after you die.

Benefit Crystallisation Event (BCE)  when your pension benefits come into payment. May not be the same as the date on which they are awarded (for instance, if you resign and freeze your pension for payment at age 60).[Back to A to Z list]

CSP  Civil Service Pensions, we are responsible for the administration of the Principal Civil Service Pension Scheme (Northern Ireland) [PCSPS(NI)].

classic A final-salary occupational pension scheme which forms part of the Principal Civil Service Pension Scheme (Northern Ireland) [PCSPS(NI)] arrangements. Its terms and conditions are those which applied to the PCSPS(NI) on 30 September 2002.

classic plus  A final salary occupational pension scheme. The benefits are a combination of your Principal Civil Service Pension Scheme (Northern Ireland) [PCSPS(NI)] classic benefits up to 30 September 2002 and the equivalent of premium benefits from 1 October 2002.

Contracting out  You can opt out or ‘contract out’ of (leave) the State Second Pension. Although you and your employer continue to pay the higher rate of National Insurance contributions, the state will pay an age-related rebate (refund) into a separate pension pot for you. [Back to A to Z list]

Deferred member  A scheme in which the benefits provided are calculated by a fixed formula and do not depend on the contributions paid or on investment performance. The most common form of this type of arrangement is a final salary plan, in which benefits are based on a proportion of the individual’s final pensionable salary at retirement for each year of pensionable service within the scheme.

Defined contribution scheme  Also known as a money purchase scheme, this is an arrangement in which the benefits due to a member are based on contributions made by the member and/or the organisation, together with any interest/investment returns. The member usually uses the accumulated funds at retirement to purchase an annuity.

Dependant A dependant can be your husband, wife, partner, children or anyone else who relies on you financially.

Dependent child  Any child who is dependent on you and who is under 17 or receiving full-time education or training. Dependency means that you are providing financial support to the child. A dependent child can include: ·

If you die after leaving classic, the child must have been dependent on you when your service ended and when you died. [Back to A to Z list]

Earmarking  A process through which some of the pension benefits due to a member are paid to his/her ex-spouse, as directed by a court at the time of their divorce.

Earnings cap The salary limit, set by the , on which pension contributions and benefits are based. It covers those who joined their pension scheme on or after 1st June 1989. It is increased each year in line with the Retail Prices Index. For 2006-07 it is £108,600.

Enhanced Protection (EP) allows you to register to effectively maintain the current value of your pension benefits just before A-day. The detailed rules are complex.

Enhancement and enhanced service  If you retire early because of ill health, die in service, or are made redundant, we may increase the number of years you have in the scheme. This is called enhancement.

Estate  This is the total of your possessions when you die.

Excess contributions  In the classic scheme, if you have more than 40 years service before you reach age 60, you continue to pay contributions until you retire. You will then receive a refund of the contributions you paid after you reached the 40-year mark. These are known as excess contributions.   
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Final pensionable earnings  This is your pensionable earnings when you retire, and on which we base your pension under classic, classic plus and premium.

Final salary scheme  Another term for a defined benefit plan, in which benefits are based on a percentage of the member’s final pensionable salary at retirement for each year of pensionable service in the pension plan

Freestanding AVC (or FSAVC)  The facility to pay AVCs to the financial institution of your choice to secure additional benefits for yourself and/or any dependants. FSAVC schemes provide retirement benefits on a money purchase basis.  [Back to A to Z list]

Guaranteed minimum pension  Pension schemes like classic, classic plus and premium must make sure that they give members a pension that is at least the same level as the pension they would have had if they had stayed in the State Earnings Related Pension (SERPS) for their service before 1997. This minimum level of pension is known as the Guaranteed Minimum Pension or GMP.  
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Income draw down  This is an option to draw income from your fund and delay buying an annuity.  [Back to A to Z list]

Lifestyle  This is an investment approach where money is switched from company shares to safer investments as you get nearer to retirement.   

Lifetime Allowance (LTA) the limit on total pension saving eligible for tax relief. Set at £1.5m in tax year 2006-7.

LTA charge the extra tax payable if your benefits at the BCE exceed your remaining LTA.[Back to A to Z list]

Mobile grade  You are in a mobile grade, if you are an executive officer or higher and your employer expects you to: move to any post within reasonable travelling distance from your home; or take up detached duty. If you were in mobile grade on 1st April 1987, you may be entitled to better redundancy terms.

Money purchase  Money purchase is one of the terms used to describe a pension where you pay contributions into a fund which is invested over the years until you retire. You can then use the fund to buy an income each year when you retire.
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Notional enhancement (only premium and classic plus)  If you are made redundant and leave with an Annual Compensation Payment (ACP), we may enhance (increase) the service on which your ACP is based. However, we do not enhance your pension in the same way. This is called a notional enhancement. [Back to A to Z list]

OPAS (The Pensions Advisory Service)  An independent organisation which gives free advice to members of the public who have a problem concerning an occupational or personal pension scheme. OPAS will also assist with general enquiries on State pensions.  [Back to A to Z list]

partnership pension account  A new defined contribution (money purchase) plan; available only to entrants joining on or after 1 October 2002.

Pension age  This is the earliest age you can take your pension without it being reduced for early payment. Pension age is normally age 60.

Pensionable allowances  Allowances which are included in your pay and which count for pension. Examples include shift duty allowance and substitution pay. Overtime payments are not pensionable, but overtime premium payments are pensionable.

Pensionable bonuses  Bonus payments do not normally count towards your pension, but your employer may have agreed that they can (in exceptional circumstances). Bonuses are not included in 'permanent' pensionable earnings and we have to average them out over a number of years when working out your final pensionable pay.

Pensionable earnings  Pensionable earnings are all earnings which could count towards your pension. They can include non-cash items, for example uniforms or accommodation.

premium  A defined benefit ('final salary') scheme. Staff in post up to 30 September 2002 had the choice of transferring from the old PCSPS(NI) (now classic) to premium.

Preserve/preservation If you leave the scheme with more than two years' qualifying service, you can leave the pension benefits you have built up in the scheme. We will then normally pay you a pension when you reach pension age. Or you can choose to transfer your preserved pension before you retire.

Primary Protection (PP) allows you to register for a personalised LTA if your pension benefits just before A-day exceed the initial value of the LTA (£1.5m)

Public Sector Transfer Club  This is a club for pension schemes which offer special terms for transferring benefits into the classic, classic plus and premium arrangements. Members include schemes run for the NHS, local government and teachers. Schemes which look like the Civil Service scheme, are known as 'by analogy' schemes.
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Qualifying service  This reflects the amount of time you have been a member of the pension scheme and it qualifies you for certain benefits. For many people qualifying service is the same as their reckonable service. But for some people, like part timers, their qualifying service will be more than their reckonable service.[Back to A to Z list]

Reckonable service  Reckonable service is the years and days that count towards your pension. Generally, the days that you are a member of the scheme reckon towards your pension. Things like strike days and career breaks do not reckon towards your pension  [Back to A to Z]

Stakeholder pension  A new form of personal pension, available from 1st April 2001 to everyone under the age of 75 (even children). It is not necessary to have any earnings to contribute. Even those in an occupational pension scheme can contribute.. The annual management charge must be no more than 1% of the member’s fund, and additional charges for services such as advice must be optional and clearly identified.

State Earnings Related Pension Scheme (SERPS)  This is the second tier to the State provision of retirement benefits. It is available to employees who pay National Insurance contributions. If a final salary scheme is ‘contracted out’ of SERPS, this means that the scheme guarantees to ensure that the benefits members will receive, at normal retirement age, will equal or exceed what they would have had from the State. The advantage, from the members’ point of view, is that they pay a reduced NI contribution to the State. SERPS is due to be replaced shortly by the State Second Pension (S2P).

State pension age  The age at which pensions are payable from the State. This is currently age 65 for men and 60 for women. However, over the ten year period from 2010 to 2020, State pension age is due to be equalised at age 65 for all.

State Second Pension (S2P)  This is the additional State pension (on top of basic state Retirement Pension) that used to be called State Earnings Related Pension (SERPS). The amount you receive depends on your National Insurance contributions. [Back to A to Z list]

Unauthorised payments any payments made by your scheme which are not ‘authorised payments’. Depending on the type of payment, either or both of the recipient and the scheme may have to pay extra tax.[Back to A to Z list]

Widow or widower/Civil Partner  The person who you are legally married to or in a civil partnership with when you die. An ex-husband, ex-wife or ex-civil partner you are legally divorced from cannot receive a widow’s or widower’s pension. If you marry after leaving classic, the widow’s pension is based on your service from 6 April 1978 and the widower’s pension is based on your service from 6 April 1988.

WPS contribution  You pay 1.5% towards a pension for your husband or wife in the current scheme and also in classic. If you are single, you may be eligible to have these contributions refunded when you leave or retire. [Back to A to Z list]